Tax status of writing competition awards

As the end of the financial year is looming I’ve been wondering whether or not I need to declare my very nice cheque from the People’s Play Award as taxable income. Asking my writing friends and searching the internet has not made it any clearer. Some say awards or competition prizes are exempt for tax purposes. Some say only ‘occasional’ awards are exempt – whatever that means!

the-writers-handbookThe Writer’s Handbook tells me that ‘most prizes and awards are not taxable, though it depends on the conditions in each case’. But it doesn’t specify what these ‘conditions’ are.

I then found a helpful thread on the British Comedy Guide which says that the tax man differentiates between ad hoc wins and prize money earned by people who pursue writing as a ‘trade’. So I’m beginning to get a bit worried.

I then decided to bite the bullet and call the HMRC. They directed me to their website which gives me a very clear answer. The key it seems is whether or not the award is ‘solicited’. If I didn’t enter my work into the comp and they just decided to give me the award (such as the Booker Prize; Best Young Playwright of the Year award – not that I’d qualify for that anymore!) then it would not be taxable. So damn, I’ll have to declare it. Grrrrrrrrrrrrr.

If you would like to find out more about managing your writing earnings, please see my post on finance and tax for writers. Please note this article was originally written for freelance magazine writers, but the same rules apply to people submitting fiction or any other form of written work for remuneration.

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